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Trends shaping the future: Future cities

Our world is becoming ever more city-centric. Today, more than half of the world’s population lives in cities. This share will increase in the foreseeable future, reaching 70% by the middle of the century. At the same time, the number of megacities with a population of more than 10 million people will climb from 33 to 50. What does this mean for future cities?

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Cities have enormous potential; they are the growth engines of the global economy. To be economically successful, they have to function properly. Their infrastructure needs to work, it needs to be reliable and in sufficiently good shape. Sizeable investments in infrastructure are required over the coming years to make our cities fit for the future. These investments target both classical infrastructure, such as roads and railways, as well as digital infrastructure, paving the way for smarter, more sustainable and more liveable cities.

Smart cities
The trend towards digitalisation is not just affecting our lives but also the cities we are living in. The integration of technology and the expansion of the digital infrastructure have the potential to transform our cities, making them more than just an amassment of asphalt, concrete, glass and steel. Technology is a tool to make our cities smarter and more sustainable. In a smart city, everything is connected: traffic lights, street lights, buildings, roads and the self-driving cars using them. Smart cities are heavily reliant on data. This data is collected by an armada of sensors and cameras that are spread all over the city, gathering information about traffic, temperature, air quality and humidity, both inside and outside. The goal of a smart city is to make our lives easier, to know what happens before it happens. Its basis will be built on new generations of telecommunication technology and applications such as artificial intelligence or cloud computing.

The new 5G telecommunication standard is currently rolled out all over the world,  faster in some places, lower in others. While consumers associate such a new standard primarily with faster download speeds, which will be the case for 5G, this is not what will set it apart. Providing mass connectivity and very high capacity at very high reliability, 5G paves the way for the Internet of Things (IoT) with its billions of connected devices. According to Ericsson, the number of connected IoT devices will rise from around 11 billion in 2020 to almost 25 billion in 2025. These devices are the backbone of the Smart City, allowing for example real-time traffic monitoring and routing already today. Further out into the future, the IoT will also enable autonomous driving, which has the potential to dramatically improve the cities’ traffic problems, reducing congestion and air pollution.

Beyond that, IoT devices can be used for smarter energy, water and waste management, thus contributing to a more efficient resource use in the cities with the ultimate goal of making them more sustainable. Such a collection of data and related analytics allow a city to improve its decision making via so-called ‘digital twins’. These are one-to-one digital copies of the city, providing real-time information about its pulse and allowing changes to be tested virtually before they are implemented in reality.

Sustainable cities
How realistic is the idea to make a city sustainable? Cities have huge resource requirements. They drive the demand for energy and water, the drive the production of waste and the emission of greenhouse gases. Making a city more sustainable means increasing its resource efficiency, it means reducing its environmental footprint. Cities striving to become more sustainable need to be centred around the circular economy, helping them to master their challenges. This turns a linear waste stream that ends in a landfill into a circular one that enables the reuse of resources. As a closed-loop system, it aims to avoid needless waste by retaining the value of materials, components, or products. This is an urgent endeavour. The world’s waste challenge is currently still growing. Primarily driven by population and prosperity growth in the developing countries we project globally generated waste to grow by 75% until the middle of the decade. With recycling being very much a developed country phenomenon, the majority of this waste ends up in a landfill, causing increasing environmental issues. Making a city truly sustainable means taking measures that do not only serve the current generation of inhabitants but also future generations from an economic, environmental as well as the social aspect.

Which megatrends should be reflected in your portfolio?

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